Israel Diverts Arab Development Funds for Apache Deal

Israeli ministers approved moving NIS 964 million from future Arab community development allocations to help pay for 12 Apache attack helicopters. The cuts are scheduled for 2027 through 2029, while another NIS 68 million will come from funds set aside for government interest payments and fees.

The combined adjustment totals approximately NIS 1.03 billion ($335 million). Ministers approved it Wednesday morning as part of two planned budget cuts totaling NIS 3.63 billion ($1.18 billion). The proposed reductions include 2.6 billion shekels for an urgent defense need.

Arab Development Funds Reallocated

Planned cuts to Arab community development allocations total NIS 964 million: NIS 169 million in 2027, NIS 342 million in 2028 and NIS 453 million in 2029. The largest reduction comes in 2029.

A separate NIS 68 million allocation for 2026 will go to the Defense Ministry, taken from funds originally reserved for government interest payments and fees. Together, the adjustments redirect approximately NIS 1.03 billion.

Ynetnews reported that ministers approved transferring approximately NIS 1 billion to the defense budget through a WhatsApp vote. The funds will pay for an urgent purchase of 12 Apache attack helicopters for the Israeli Air Force.

Ministers were told the allocation covered “urgent defense procurement that cannot be delayed.” Defense Ministry officials said the purchase was an immediate security priority and justified speeding up the budget process. Defense Minister Israel Katz backed the move.

A Dispute Over the Helicopter Purchase

The transfer came after the Finance and Defense ministries clashed over military procurement funding. The previous week, a roughly $1 billion agreement with U.S. aerospace company Boeing to buy 12 Apache helicopters collapsed when the ministries failed to agree on how to finance approximately $288 million of the cost.

The dispute followed repeated extensions by the U.S. administration. The final deadline to place the order expired the previous week.

Earlier in the week, defense officials said the proposed emergency cuts had nothing to do with the Apache deal and accused the Finance Ministry of misrepresenting the funding dispute. On Wednesday, they acknowledged that the budget adjustment aimed to rescue the purchase and let Israel proceed with ordering the helicopters despite the expired deadline.

Approval Still Required

The accelerated procurement and revised payment schedule received preliminary approval in August 2026. The plan still needs an amended government decision and final authorization from the ministerial committee responsible for defense procurement.

Defense officials said Israel would cover the remaining funds needed to complete the transaction by postponing payments on other future defense contracts. They called the arrangement a technical accounting measure the Finance Ministry requires before the agreement can be signed. Final procurement approval remains outstanding.

The Knesset’s joint committee overseeing the defense budget was expected to approve a separate NIS 17.5 billion transfer to the defense establishment the following week, after the Finance Committee had approved it. The ministers’ decision redirects planned Arab community development funds to helicopter procurement, while further defense-budget approval remains pending.